If the elasticity of demand for Good A is -3,a 33% decrease in quantity demanded of Good A results from a(n)________ in the price of Good A.
A) 99% decrease
B) 99% increase
C) 11% decrease
D) 11% increase
E) 33% decrease

Question

Quizplus · Accepted Answer

Elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price. If the elasticity is -3 and the quantity demanded decreases by 33%, the price must have increased by 11% (since -3 = -33% / 11%).

If the Elasticity of Demand for Good a Is -3,a